A warning sign on a road near the Bernard Matthews factory farm in Holton, Suffolk. Photo: Leon Neal/AFP/Getty

The government was last night investigating possible links between the discovery of H5N1 avian bird flu at a Bernard Matthews turkey farm in Suffolk and recent outbreaks of the disease in Hungary.

As the cause of the UK outbreak remained unclear, a team of 30 people continued to gas 159,000 turkeys on the Holton farm in Suffolk throughout the night. The government confirmed that the virus which was identified in one turkey shed on Friday was the same strain found last month in Hungary, where an outbreak among geese on a farm prompted the slaughter of thousands of birds.

A spokesperson for the Department for Environment, Food and Rural Affairs said last night it was investigating movement of people and animals on and off the farm, including any links the farm may have had with Hungary, where there have been a series of outbreaks in the last month and where Mr Matthews owns Saga Foods, the country's largest poultry company.

A spokesman for Bernard Matthews said the two operations were connected only in terms of ownership. "All our birds are British. The fact that we have a Hungarian operation is immaterial. It is very unlikely. It's a complete mystery to us. We have the highest biosafety standards of anyone. We are waiting for Defra to finish its investigations and they will tell us the likely cause." He refused to comment on the possibility of a wild bird carrying the disease getting into the plant, but said there was no history of such an event.

A Defra spokesman said no live birds had been imported from Hungary in the past year, although he could not comment on the suggestion that some eggs may have been imported.

Defra also announced that Bernard Matthews was entitled to compensation under the Animal Health Act 1981 for all healthy birds slaughtered to control diseases, including avian flu. Compensation would be paid to the company at the value of each bird just before slaughter, and the company would also be reimbursed for any eggs destroyed, a spokesman said.

Last night, as the carcasses of the birds were shipped to Staffordshire for rendering, the government sought to play down health fears. Chief scientist Sir David King said: "I'm really confident this is not going to spread to other poultry holders."

Britain's £3.4bn poultry industry, which produces 800 million birds a year, was, however, braced for a lost of export orders last night. When avian flu struck in France last year, non-EU countries imposed trade bans, some of which lasted six months.

Last night Japan temporarily halted all poultry imports from Britain.

Charles Bourne, chairman of the National Farmers' Union poultry board, said: "Of course we are concerned. There is the likelihood that there could be an effect on sales. If chicken sales drop by 5%, that means we produce 16 million chickens a week in this country and some 500,000 are not wanted. That will affect the market and prices will go down." But the main supermarkets reassured customers that their poultry and egg products were safe and supplies were unaffected.

The government last night said it was monitoring the public health situation. Health secretary, Patricia Hewitt, said: "We are preparing very, very seriously and thoroughly for the possibility of a pandemic flu. It is a very remote risk, but if it did happen it could be very serious indeed."

The Department of Health has stockpiled enough Tamiflu antivirals to cover a quarter of the population, as advised by scientists, and conducted a massive preparatory exercise last week, Ms Hewitt told ITV1's The Sunday Edition.

But mystery deepened over how the disease had got into what Bernard Matthews called "the most bio-secure" plant in Britain, with other turkey breeders and scientists discounting the theory that a wild bird had got into the closed plant.

"Nothing has given us any indication whatever that this event is linked directly to wild birds," said Lawrence Woodward, director of the Elm Farm Research Centre, who sits on the Defra committee of avian flu stakeholders. "The idea that a solitary bird carrying H5N1 is flying around East Anglia out of the migratory season and then falls down a ventilation shaft of the biggest poultry farm in Britain is just not viable," he said.

Deputy chief veterinary officer Fred Landeg said an investigation was under way to discover the source of the outbreak. "We are not complacent and hopefully we will be able to contain it," he said.

Several theories as to the origins of the disease are being considered by Defra. One is that it was introduced by workers who had accidentally stepped in bird faeces and brought it into the works. This would suggest a significant failure of the plant's most basic biosafety rules, and was denied strongly by Mr Matthews' spokesman.

It also emerged yesterday that company vets who were called in after significant deaths among the Holton birds were discovered on Tuesday, initially diagnosed the disease as E coli. Later they suspected Newcastle's disease.

Yesterday Defra increased the area where restrictions are in force. The restriction zone, in which all poultry must be kept isolated from wild birds and where movements must be licensed, now covers 807sq miles (2,090sq km)of east Suffolk and south-east Norfolk.

One Bernard Matthews' worker, who did not wish to be named, told BBC News 24: "Everybody is a little scared about the news. It is a shock for everyone." The Portuguese worker said he had not been provided with any information, adding: "I am scared because of the flu and most importantly because we know the factory is very important. A lot of people work there and some are scared to leave their jobs. Tomorrow I am going to go to work."

The UN senior coordinator for avian flu and human influenza, David Nabarro, said in Indonesia that he expected an increase in bird flu around the world: "At the moment there are rather a lot of [cases] ... that is why everybody needs to be a little anxious about what is happening."

In a letter to the Guardian, Nobel prizewinners and campaigners, including Noam Chomsky and Naomi Klein called for the elimination of large-scale intensive livestock farming which they argue is "accelerating the development of new pandemic diseases".